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The director famously fell out with the star in 2010 after she compared him to Adolf Hitler following her appearance in Transformers: Revenge of the Fallen.
She was subsequently replaced in the third Transformers movie by Rosie Huntington-Whiteley, but has now been welcomed back to the fold by Michael for his next project.
Writing on his website, he said: "TMNT: We are bringing Megan Fox back into the family."
'The Hitler thing'
Megan will play April O'Neil in the film, a TV reporter who is best friend to the sewer-dwelling jujitsu expert turtles.
Sources say Megan and Michael - who is producing, but not directing Teenage Mutant Ninja Turtles - reconciled over a series of recent meetings. Megan was said to have been won over by director Jonathan Liebesman, who wowed her with the film's storyboards.
Megan has recently returned to acting after giving birth to her first son, Noah, with husband Brian Austin Green in September last year.
She originally fell out with Michael by saying he "wants to be like Hitler on his sets, and he is. So, he's a nightmare to work for."
After excluding her from Transformers: Dark of the Moon he admitted it was because of "the Hitler thing".
